Could Airbnb hit $ 200 in 2022?

Airbnb (NASDAQ: ABNB) makes it easier for people around the world to find the accommodation they are looking for when traveling. Of course, the business suffered a downturn at the start of the pandemic, when fewer people were interested in leaving their homes.

However, Airbnb is recovering quickly and is emerging from the disruption caused by the pandemic as a more robust and efficient business. At the time of this writing, the stock is trade at $ 172; could it reach $ 200 in 2022?

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The rise of the omicron variant could be a headwind for Airbnb

Airbnb’s business is rebounding as more of the world’s population is vaccinated against COVID-19. More than 9 billion doses of COVID vaccines have been administered worldwide to date, and millions more daily. According to Bloomberg, at the current vaccination rate, 75% of the world’s population could have at least one injection in three months.

Yet the prevalence of omicron variant has given rise to a new wave of infection, reaching record levels in many parts of the world. Airbnb has yet to release financial results since this new variant took hold, but it is likely that it could reduce travel demand and hamper Airbnb’s business to some extent.

The magnitude of the negative impact of the omicron variant on Airbnb’s business will likely be the primary determinant of the stock’s performance in 2022. Airbnb was on track to recover before the emergence of the omicron variant. In its most recent quarter, ended September 30, 2021, Airbnb reported 36% higher revenue than the same quarter of 2019 and 213% higher net profit.

Airbnb arguably offers superior service to travelers than a traditional hotel or resort. With over 4 million hosts on its platform, travelers are more likely to find what they’re looking for in their price range. These hosts come from all parts of the world with many types of unique places to stay – from entire houses to apartment rooms to converted garages. This contrasts with hotels and resorts, which typically only have locations in popular destinations and limited choices in room size and type.

Airbnb stock is expected to rise 16% to $ 200

In addition, Airbnb’s business model has the potential for higher returns compared to hotels and resorts. Airbnb does not own or operate any rental property. Instead, it manages the platform where hosts can list places to stay that guests can then book. Airbnb charges a fee for each transaction.

This thin asset model may be more cost effective than operating expensive hotels that require reasonably large on-site staff to manage and accommodate clients. This can become ineffective because generally the most popular travel destinations also have the highest pay rates – think Los Angeles, New York, London, Paris, etc.

In contrast, Airbnb is not obligated to hire support staff from the region in which customers are staying. Investors got a glimpse of Airbnb’s potential profitability in the third quarter, when it made $ 834 million in net income on $ 2.2 billion in revenue.

Airbnb Stock is expected to increase by 16% in 2022 to reach $ 200. It would be reasonable to say that Airbnb will hit $ 200 at some point in 2022. Whether it exceeds or maintains this level will largely depend on the direction of the coronavirus pandemic.

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Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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